All about EDI
Please write some comprehensive notes to explain EDI. Use the following questions
as a guide:
1. What is EDI and what does it enable?
2. Outline the technologies are required for EDI – including software and
communications
3. How is EDI defined and by whom?
4. What does a typical EDI data exchange look like?
5. Identify and discuss the benefits from using EDI
6. Identify and discuss potential problems from using EDI
Introduction to EDI
Discussion with class
1. What transactions take place in businesses? For example, if you wanted to
purchase something?
2. You write out an order using the company format – this gets taken to Purchasing
who then make the order giving the details that are required to the vendor.
3. Make a list of what details you may want to put on our internal system.
4. Make a list of what details the vendor may want from you.
5. How would you send this information?
6. What fields are similar and required at both ends?
7. What fields are not necessary that we have but supplier does not need?
8. What problems can you see with the field definitions?
9. If you wanted to send the information electronically what format would you send
the data?
10. If this was automated how would we tell the system what order the data is
coming?
11. Can you see the problems if we have two different systems?
What is EDI?
Formal notes
 Electronic Data Exchange
 It is a business tool
 Exchange of STANDARD business documents from company to company.
 Before: use fax or mail to send to supplier from customer. Now use electronic
exchange.
 However need to standardize between the two: what details and in what format.
 ANSI – agreed set of standards that businesses conform to internationally
 850 is a purchase order – need to define what a PO is and what typically you would
expect to have on it. (pdf saved)
 Then need to show how databases are different and need software to translate from
one database to another.
Definitions to help explain EDI
Trading Partner - The sending and/or receiving party involved in the exchange of
EDI transmissions
Translator - Software that is used to convert standardized EDI data to a corporate
proprietary format and vice versa
Transaction Set - The EDI format for a business document, such as an investor
report, purchase order or invoice
Standards - Guidelines that provide the definition and format of business documents,
allowing EDI linked computers to speak the same language
Mapping - The process of identifying the standard data elements’ relationship to the
application data elements
Good site for more information:
http://www.comdist.com/edi.htm
Example of EDI working
http://www.covalentworks.com/how-edi-works.asp
Draw on white board as flowchart
A buyer prepares an order in his purchasing system and has it approved.
Next, the EDI order is translated into an EDI document format called an 850
purchase order.
The EDI 850 purchase order is then securely transmitted to the supplier either via
the internet or through a VAN (Value Added Network).
The buyer’s VAN is a like an electronic post office that interconnects with the
supplier's VAN. The VANs make sure that EDI transactions are sent and received.
The supplier’s VAN ensures that the supplier receives the order.
The supplier’s EDI system then processes the order. Data security and control are
maintained through out the transmission process using passwords, user identification
and encryption. Both the buyer’s and supplier’s EDI applications edit and check the
documents for accuracy.
Each trading partner has unique EDI requirements. These will include the specific
kinds of EDI documents to be processed, such as the 850 purchase order used in the
example above, 856 advance ship notices and 810 invoices. In fact, most any business
document that one company would exchange with another company can be sent via
EDI.
However, each EDI document must be exchanged with each partner in exactly the
format they specify. Many partners will have an EDI implementation guide or kit that
explains their specific requirements. Maps are required to translate the EDI
documents from the trading partner’s format into the format that is useable by the
receiving party.
Additional Notes
 EDI capability involves either buying or outsourcing the following components:
 Software for communications, mail boxing of EDI transactions, mapping and
translation.
 VAN, ASYNC, BISYNC, and Internet communications as required by various
partners.
 Hardware including a server or PC, communication devices and peripherals
 Secured office space and monitored security
 Data backups and redundant power for reliability
 Additional software will be needed if integration of the EDI transactions with back
office systems is desired.
 A VAN will need to be contracted for ongoing EDI transmissions.
 Personnel must be trained in how to use the software and communication devices.
 Maps will need to be developed for each EDI document type to be exchanged with
each partner. Maps translate the encoded EDI record into a useable format.
 CovalentWorks specialty is outsourcing all of the components of EDI for small and
mid-sized companies. All our clients need is internet access and email. We take of
all the 9 items listed above for you - all of the software, VAN transmission,
hardware, communications, mapping, translation and labor.
Further Recommended Reading
Computer Confluence – page 479 Information Business Systems
http://en.wikipedia.org/wiki/Electronic_Data_Interchange
Demonstration of EDI
http://www.vantree.com/demo1/Demo1_login.html
http://www.sterlingcommerce.com/Products/EDI/index.html
Electronic Data Interchange (EDI) is widely-used technology for the automated exchange of documents between dissimilar
applications. It allows value chain partners to exchange purchase orders, invoices, advance ship notices and other business
documents directly from one business system to the other, without human intervention. Proven advantages are fewer errors,
lower administrative costs, and faster order-to-cash cycles.